Mayor John Tory’s campaign staff behind favourable SmartTrack report

One of Mayor John Tory’s key campaign ideas is getting a boost from a not wholly unexpected source: some of the people who ran his campaign.
A group called Friends & Allies of SmartTrack (FAST) has released a report backing Tory’s election proposal to use tax increment financing (TIF) to pay for SmartTrack, his signature transit line.
The report determined that TIF, a complicated and untested financing mechanism, could raise up to $2.3 billion over 30 years, which could be enough to pay the city’s share of the rail project.
“Our analysis shows that tax increment financing would help fund SmartTrack, and would free up resources for other projects,” said Arthur Lofsky, one of the report’s authors.
FAST describes itself as a not-for-profit advocacy group formed last year by “like-minded people who believe that SmartTrack is Toronto’s chance to erase decades of inaction on transit.” The group’s managing director is Tom Allison, who was Tory’s campaign director, and its advisory board includes David S. Young, who served as legal counsel to the mayor’s 2014 campaign.
Lofsky once worked as a policy director for former Ontario Liberal finance minister Greg Sorbara, and like the report’s other author, Peter Tomlinson, the former director of economic development for the City of Toronto, he volunteered on Tory’s campaign.
While Allison acknowledged that FAST’s support of SmartTrack “aligns with what the mayor campaigned on,” he stressed that there “isn’t an association of any kind” between the group and the mayor’s office. “We’re independent,” he said.
Keerthana Kamalavasan, a spokeswoman for the mayor, also said Tory “is not associated” with FAST. But the mayor does agree with the group’s general conclusions. Kamalavasan wrote in an email that the mayor “is confident tax incremental financing can finance the City’s portion of SmartTrack.”
TIF has been used by American municipalities to fund infrastructure projects, but has never been tried in Toronto. In simple terms, it would work like this: first, the city would designate specific areas that would benefit from SmartTrack. Then the city would borrow money to build the transit line. Years later when property values within the TIF zone start to increase as a result of being served by new transit, the city would take that increased tax revenue and pay off SmartTrack’s construction costs.
The FAST report, which was based on growth projections commissioned by the city, identified three potential TIF zones: Liberty Village, the West Don Lands, and the area of Lawrence Ave. E. near the Stouffville GO corridor. It projected that SmartTrack would create 11.45 million square feet of new commercial growth, and 5.2 million square feet of new residential growth. The authors projected that the development could help fuel up to $2.3 billion in property tax revenue, contingent on changes to provincial legislation.
That would cover most of the $3.2 billionthat the province has said the city and federal government needs to find to pay for SmartTrack, which has been whittled down to a 15-stop line with up to six new stations, down from the more expensive 22-stop project Tory pitched during the campaign. The price includes up to $2.1 billion for the Eglinton West LRT, which would replace the western spur of Tory’s original SmartTrack plan.
The federal Liberals have pledged $2.6 billion for SmartTrack.
Murtaza Haider supports SmartTrack, but cautions against seeing TIF as a magic bullet. Haider, an associate professor at Ryerson University’s Ted Rogers School of Management, examined TIF in a recent paper for the Institute on Municipal Finance and Governance at the Munk School of Global Affairs, and determined that while it can be successful for smaller projects, it’s risky when relied on for larger ones. His research found that only two jurisdictions have attempted to use TIF to for projects worth over $1 billion, and both fell short.
Haider explained that TIF relies on making accurate projections about the real estate market over several decades, and a shock like a correction to Toronto’s hot housing market sometime within the next 30 years could blow a hole in SmartTrack’s budget.
“My fear is when I look at these numbers, there’s such a large speculative amount tied to price appreciation and tied to new growth in residential and commercial real estate that may or may not occur, and there’s no one who can say . . . we are 100 per cent sure that will happen,” he said.
Predicting future real estate values linked to SmartTrack is complicated by the fact that basic details of how the service will operate, including how often trains would run, have yet to be finalized.
City staff are studying the role of TIFs in paying for SmartTrack and are expected to report back in the coming months. Metrolinx, the provincial transit agency in charge of the GO regional express rail project on which SmartTrack depends, wants a funding commitment from the city by Nov. 30.